Speaking to Xenia and the first room - Kayle
Speak to Xenia who needs help rescuing a prisoner down in the catacombs. Tell her you will help. Climb down the stairs and she will follow. After a short cut-scene you will learn that Kayle is alone. When you run out to fight him, a rock strikes Xenia and she falls back. Go attack Kayle. He will ask you if you are going to kill him. You can either kill him or let him go. Either way you will get his stuff.
Second room - Caitlin
It was recommended by Xenia to fight Caitlin, the person in the next room, with range. Use the sling dropped by Kayle and fight her. Once she is down on the ground use the winch and go through and talk to her. Again you have the option of killing her or sparing her life. She will leave her stuff. Pick it up.
Third room - Reese
Walk down the stairs and open the tomb door. Reese will attack you; fight him. Again you have the option of killing him or sparing his life. When you give him the option to live, he will kill himself with a potion. Now untie Ilona and then you will appear back at the surface after a cut-scene. If you missed retrieving Reese's sword, Xenia will have it for you. You can chat with Xenia if you wish.
Congratulations! Quest Complete!